How to Calculate Intrinsic Value of a Stock (Warren Buffett) #
- Intrinsic value is the true worth of a company, independent of market fluctuations.
- It's the discounted present value of all future cash flows.
- Discounted cash flow (DCF) is a valuation method used to estimate the intrinsic value of an investment based on its future cash flows.
- To calculate intrinsic value, you need to project the company's future cash flows and discount them back to the present value.
- The discount rate reflects the risk involved in the investment.
- The intrinsic value is the price you're willing to pay for a stock based on its future cash flows, not its current market price.
"The intrinsic value of a business is the discounted value of all the cash that can be taken out of the business during its remaining life." - Warren Buffett
Charlie Munger's 5 Investing Tricks #
- Focus on businesses you understand.
- Look for businesses with a durable competitive advantage.
- Invest in companies with strong management.
- Buy companies with low debt and strong cash flow.
- Be patient and disciplined.
"The best way to get rich is to be patient." - Charlie Munger
Mohnish Pabrai's Unconventional Secret to Investing Success #
- Pabrai advocates for a "value investing" approach, focusing on finding undervalued companies with strong fundamentals.
- He emphasizes the importance of patience and discipline in investing.
- He believes in long-term investing and avoids short-term trading.
- Pabrai's "secret" is to patiently accumulate shares of undervalued companies over time and hold them for the long haul.
"Investing is about finding businesses you understand and then patiently waiting for them to grow." - Mohnish Pabrai